Need-to-Know Tips for Safeguarding Your Precious Metals
by Stefan G. President of Money Metals ExchangeBy Clint Siegner, Originally
Published at Money
Metals Exchange
Gold and silver investors have strong opinions
about third-party storage of metals. Privacy, the lack of counterparty risk,
and precious metals’ role as “crisis money” are among the most attractive
features of physical bullion. So it is no surprise that many investors are
totally committed to storing metals at home or someplace else that is both
private and accessible 24/7.
We wholeheartedly agree
with that sentiment and always recommend personal possession when it comes to
at least some of your metals. However, there are a number of circumstances
where third-party storage makes a heck of a lot of sense. Let’s take a look at
the most common…
Physical
Security and Insurance Coverage are a Top Priority
Some folks live in
high-crime neighborhoods and may have experienced a home invasion or burglary.
Others may have a large holding where maximum, around-the-clock security is
only prudent given the stakes involved.
We even have customers
worried about family members with an addiction problem and a history of
stealing.
There are ways to improve
security when storing at home. However, when it comes to physical security, a
professional vaulting service such as Money Metals Depository cannot be matched
– not even by banks. The best depositories offer armed guards, Class 3 vaults,
multiple perimeters, state-of-the-art electronic security, dual controls, fully
segregated storage, and, perhaps most importantly, insurance coverage for your
holding.
People with safe deposit
boxes at a bank are often surprised to learn the contents of their box are NOT
insured. Worse, banks have a history of working with regulators and may well be
complicit in any government scheme to declare a bank holiday and “bail-in”
or confiscate assets.
Secure storage at a
non-bank institution is a far better idea.
Silver
Can Be Heavy and it Needs More Space
A monster box of 500 silver American Eagles weighs
roughly 40 pounds. That is more weight than some customers want to handle. Some
simply can’t.
Silver can also be space
intensive. 500-ounce silver boxes are roughly the size of a larger shoe box.
The more of them an investor accumulates, the greater the chance the holding
will outgrow the space available in their safe. And getting a larger safe isn’t
always an option.
Minimize
Costs and Transact More Efficiently
Bullion investors are well
acquainted with the advantages of holding tangible coins, rounds, and bars. But
buying and selling involve transaction costs, including shipping.
Of course, some companies
such as Money Metals Exchange ship and insure all orders at no cost. However,
when it is time to sell metal, there is going to be some expense involved with
the return shipment. Not to mention the time and effort needed to get the
metals packaged and mailed.
None of this is a big deal
for investors who plan to buy and hold the metal indefinitely. It’s another
story for investors who trade more often. Some trade based on the gold-silver
ratio and periodically swap one metal for the other. Other investors are buying
and selling metal on a structured basis – perhaps weekly or monthly.
Then there are individuals
who simply want the lowest possible premiums and prefer exchange-sized gold and
silver bars. For these bars, a third-party vault which offers storage locations
inside the COMEX system, is essential.
100-ounce gold bars must
be shipped via armored truck in order for the shipment to be insured. That can
be prohibitively expensive and difficult to arrange. 1,000-ounce silver bars
weigh 70 lbs apiece, making them both awkward to handle and very expensive to
ship via the Postal Service or UPS.
On top of this cost and
hassle will be costs associated with having the bars melted and re-assayed when
they are sold. This is a requirement for all bars coming from outside the COMEX
chain of custody.
There is no cost to ship
and insure when customers buy from Money Metals Exchange and store with Money
Metals Depository. The reverse is also true; there is no shipping cost when
selling stored metals back to us. And transactions can be completed without
hassle or transit delays.
Hold
Bullion inside an IRA
More and more people are
dumping conventional (paper) securities and transferring funds into
self-directed IRAs where they can invest in tangible assets such as bullion.
However, IRS rules restrict investors from directly holding the assets. That
means finding a depository to store the IRA metals.
Note: A few IRA custodians
and metals dealers are promoting “self-storage” or “home storage” IRAs that
attempt a clever work around to the third-party storage requirement of the IRS.
The scheme requires strict record keeping, significant set-up expenses, and
plenty of risk because it has not been fully tested in court. It may be
disqualified, leaving people liable for taxes and penalties. Accordingly, we
advise great caution and strongly suggest storing with an approved vault
instead.
To sum up, people should
at least have an “emergency stash” of metal they can access at any time. That
does not mean 100% of investors should have 100% of what they own stored at
home. There are plenty of cases where a secure storage facility is the way to
go.
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Created on Dec 31st 1969 18:00. Viewed 0 times.